You hear “Mortgage Rates are the lowest they’ve been in decades” but - does that mean everyone should refinance? Is NOW the right time? Will rates go lower?

Let’s face it - the only question you can reasonably answer is whether refinancing NOW will actually save you money. You can’t predict the future - if you could, you wouldn’t need a mortgage ;). The best thing you could do is focus on those things you can control.

When it was time for me to consider refinancing, I did what any good spreadsheet geek would do - I poured a glass of wine. Oh, and then I created a spreadsheet!

I created this mortage refinance analysis calculator to match the process I used in answering the question “Will I actually save money after closing costs, and what is the payback period?”.

Of course the next step is collecting new mortgage options. There are loads of ways to do this - either online or through your current bank or simply contacting other banks directly to see what they’re offering. The methods you use online should take into consideration how much spam (er… advertising and promotion) you want to receive after your initial request. Using sites like Lendingtree.com or Nerdwallet.com or Bankrate.com, you can get good initial information, but will likely need to give more contact information to get deeper data like closing costs. Remember - most of those sites get fees from actual lenders - banks - when they feed your information to them and you end up closing on a loan - so they are by nature trying to get you to click through to the bank sites - or - collect your information. The Banks also will want your contact information to sell you a loan. “More contact information” means you’ve got the risk of being bombarded with call-backs or emails - so consider that before giving out contact information. Mortgage companies are very competitive in trying to reach you early and often.

Once you have some options - and some data - about refinance mortgage terms you can potentially obtain, you can use the mortgage refinance analysis calculator spreadsheet to compare those to your current mortgage. The calculator gives you your new payment amount for up to three loans, as well as your closing costs of the points you’ll likely have to pay at close. Make sure you get that data from any potential loan provider as well as OTHER CLOSING COSTS. Always ask those questions so you can compare fairly the options against your current loan.

Once you have your current loan and the new loan options in the spreadsheet, you get a picture of the monthly savings (assuming the new loans result in a lower payment than your current loan) and a calculation of the number of months payback period to cover the closing costs you paid to refinance. That is where you’ll get a sense of whether it’s worth refinancing. If it takes 24 months to pay yourself back the cost of closing, it might not be worthwhile - but if the payback period is just 3 or 5 months, it seems like a no-brainer. The calculator will also tell you how much you’ll save PER YEAR with the reduced monthly payment.

The calculator also allows you to enter adjusted terms for your existing loan - in case your bank offers you new rates knowing that you might refinance. This happened to me - since they knew I was way over-paying at the time.

Try the Mortgage Refinance Analysis Calculator if you’re thinking of refinancing and need a simple way to help make the decision!